SaaS & Retention
ARR Calculator
ARR is MRR times twelve, which is trivially simple, and the useful part is what happens when you carry growth and churn forward a year. Enter your rates to see the run rate you are actually heading toward.
Result
FormulaARR = MRR × 12. Projected ARR = MRR × (1 + net monthly growth)^12 × 12
Worked example
$68,000 of MRR is $816,000 of ARR today. Growing 4 percent monthly against 2 percent revenue churn is a 2 percent net monthly rate, which compounds to about $1,034,853 of ARR in twelve months, roughly $218,853 of new run rate. Halving churn to 1 percent would add far more than raising gross growth by the same point, which is the argument for funding retention first.
What to watch for
ARR is a run rate, not revenue earned. It describes what the next twelve months would produce if nothing changed, and quoting it as though the money is already in the bank is one of the more common ways subscription businesses mislead themselves.
Only include committed, recurring subscription revenue. Usage-based revenue that fluctuates, services work and one-time fees do not belong in ARR, however much they improve the headline.
A single percentage point of monthly churn is worth more than a point of growth once you compound it, because churn works against your entire base while growth works from a smaller starting position each month.
Frequently asked questions
What is the difference between ARR and revenue?
ARR is a forward-looking annualised run rate based on current subscriptions. Recognised revenue is what you actually earned over a past period. They rarely match, and confusing them causes real problems in fundraising and planning.
Can ARR grow while revenue falls?
Yes, if a large new contract signs late in the period. The run rate jumps immediately while the recognised revenue arrives across the following months, which is exactly why both numbers belong in a board pack.
Read next
You might also like
Ranked by how closely each page overlaps with this one, using a similarity model over the whole library.
More SaaS & Retention calculators
LTV Calculator
Calculate customer lifetime value from ARPU, gross margin and monthly churn, with average lifetime in months and revenue LTV.
LTV to CAC Ratio Calculator
Calculate your LTV to CAC ratio, CAC payback period in months, and the maximum CAC a healthy 3x ratio would allow.
Churn Rate Calculator
Calculate monthly customer churn, the annualised equivalent, net growth rate, and the average customer lifetime it implies.
Retention Rate Calculator
Calculate customer retention rate correctly by excluding new signups, plus churn, customers retained and the annualised rate.
MRR Calculator
Calculate monthly recurring revenue, net new MRR from new, expansion and churned revenue, growth rate and annual run rate.
CAC Payback Period Calculator
Calculate how many months it takes to recover customer acquisition cost from gross profit, plus first-year profit per customer.
This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.